Reassessment Without Jurisdiction Cannot Stand: ITAT Quashes Rs 20.12 Crore Reassessment Against Lalit Modi
The Income Tax Appellate Tribunal (ITAT) Delhi has quashed an order dated March 29, 2023, passed by the CIT(A), New Delhi, wherein the reassessment proceedings initiated by the tax authorities in the assessee’s case were sustained.
The reassessment proceedings had increased the assessee’s income from Rs. 54.81 lakh to Rs. 20.12 crore, on the grounds of unexplained credit card spending of Rs. 4.24 crore, private jet lease rental and fuel expenses of Rs. 9.65 crore and liabilities of Rs. 5.66 crore linked to the entity Golden Wings Pvt Ltd.
Lalit Kumar Modi had filed the present appeal before the ITAT Delhi, challenging an order dated March 29, 2023, passed by the Commissioner of Income Tax (Appeals) [CIT(A)], New Delhi. The appeal challenged the validity of reassessment proceedings initiated by the tax authorities. The tribunal bench, consisting of Judicial Member Vikas Awasthy and Accountant Member Brajesh Kumar Singh, announced its final decision on March 06, 2026.
The assessee had filed its income tax return (ITR) for the Assessment Year 2010-11, declaring total income at Rs. 54.81 lakh. The return was selected for scrutiny. During assessment proceedings, the AO issued a notice dated July 27, 2011, under Section 143(2) of the Act. Later, the case was reopened through a notice dated March 29, 2012, on the grounds that certain income had allegedly escaped assessment. The assessee objected to the reopening of the case; however, the Assessing Officer (AO) did not decide on the raised objection and completed the assessment on March 28, 2013, declaring the total income of the assessee at Rs. 20.12 crore.
When the case was taken to the ITAT Delhi, the tribunal noted two major procedural problems: First, the reassessment proceedings were initiated without completing the initial scrutiny assessment proceedings. To announce its decision on this issue, the tribunal cited an earlier ruling in the case titled KLM Royal Dutch Airlines v. Assistant Director of Income Tax, which stated that reassessment cannot be started while regular assessment proceedings are ongoing. The second issue was that the AO did not dispose of the taxpayer’s objections before completing the reassessment, which is an explicit violation of the judgement of the Supreme Court in GKN Driveshafts (India) Ltd v. ITO.
Considering the aforesaid findings, the tribunal quashed the entire assessment proceedings, holding that the reassessment order was without jurisdiction and legally invalid, and allowed the assessee’s appeal in full. Since the case was decided on jurisdictional grounds, the tribunal did not examine the merits of the additions made by the tax department.
Citation: Lalit Kumar Modi Vs DCIT (ITAT Delhi); ITA No. 1636/DEL/2023; 06/03/2026; 2010-11
